Cavell Group has witnessed a dramatic shift in the cloud communications industry. We have seen a huge number of service providers and telecommunications orientated business look to incorporate Microsoft Teams, or supplementary Teams services, into their portfolios.
Back at the start of 2020, before the global pandemic took hold, over 55% of the cloud communications service providers that Cavell Group surveyed said they were looking to, or already offered some form of direct routing service for Microsoft Teams. In recent surveys, which will be concluded by the end of next month, the proportion looks to have risen significantly.
The Teams related opportunity seems to be undeniable. With the Teams application boasting over 75 million daily active users, even if many are using the applications most basic forms, the base market is surely there. Cavell’s research shows that even though currently only a very small proportion if these users have telephony functionality enabled, that is set to increase. The tantalising possibility of enabling telephony services to an increasing number of these 75 million users is one that has encouraged the industry ‘en masse’ to embrace Teams. During this year’s Inspire Microsoft revealed that Microsoft 365, the productivity subscription suite which includes Teams – much to the ire of major collaboration competitor Slack – now serves nearly 260 million monthly active users. If Teams can increase its penetration into this number – seemingly quite low hanging fruit – the opportunity is amplified.
Exploiting this growing opportunity might not be simple for traditional stakeholders within cloud communications. Microsoft’s partner model requires more arguably more in-depth integration and knowledge than those of traditional switch vendors. Service providers cannot expect to leverage the same level of licensing margin in a Microsoft Teams telephony environment. A successful supplementary play in the Microsoft Teams telephony space will require more nuanced strategic integration. Traditional Microsoft partners, stemming from the IT space will be more accustomed to the model required, one built on supplementary supporting services.
During this week’s Inspire the communication focused sessions provided a glimpse into how Microsoft sees the opportunity for partners. Microsoft is placing a huge focus on the holistic opportunity offered in its technology portfolio. Teams represents just one, albeit important, aspect of the overall picture. Telco operators looking to explore the opportunities created by modern communications in B2B or B2C environments need to evaluate other areas of the Microsoft technology stack to see if they can leverage supplementary elements to augment margin and revenue streams.
Microsoft clearly sees Azure as the underlying facilitator on which many of these possible opportunities will be based. Its recently ratified acquisition of Metaswitch clearly equips Microsoft with the networking capabilities to make Azure more appealing to the cloud communication industry as a whole. With the worldwide public cloud service market estimated to be worth over $250 billion it’s not hard to see why the Azure play seems so important.
The areas that might appeal to cloud communications service providers outside of purely Teams, or direct routing, all seem to involve leveraging the power of Azure to help enterprises globally with digital transformation. Network & IT BSS renovation and replacement is one area where service providers can utilise their networking expertise and look to the cloud to offer a new realm of innovative solutions that might better cater for a changed world consisting of more remote and disparate workers.
Vast opportunities created by 5G were also put forward as an area of interest for the communications industry. Microsoft appears to be placing heavy weight on the next generation of cellular networks. With hundreds of billions set to be invested by telcos over the next 5 years, recouping these investments by leveraging knowledge from extensive data usage is going to be key. Microsoft appears to offer partners some possibilities in this area with Azure capable of processing and managing the next generation of applications that will be required by businesses over the next decade.
Intelligent Edge capabilities within Azure aim to offer partners the capability to further leverage enterprise data. Microsoft said this week that by 2025 75% of enterprise generated data will be processed at the edge. Microsoft has designed and built Azure to offer partners the tools that can be used to take advantage of this trend. Using uniform, consistent programming models, offering AI and ML enhancement services, and DevOps are just some of the tools that Microsoft hopes will simplify cloud and edge app development so that partners engage for mutual benefit.
These opportunities might sound more complex than some of the more traditional license resale or agent models that have proliferated in the cloud communications industry but it is in Microsoft’s interest to help partners exploit them. 95% of Microsoft’s commercial revenue is partner driven. Telecommunications is one area of Microsoft’s portfolio that you might say technical and operational experience is lacking, despite some of its recent acquisitions. Microsoft wants to leverage the cloud communications industry for its expertise so that it can help drive through new innovate opportunities, allowing both to thrive.
As industry interest in the Microsoft Teams opportunity continues to grow it becomes apparent that this is just the first point of contact for Microsoft. Microsoft will be hoping that many of the new partners and providers engaging with Teams will continue to explore the possibilities and find much more behind the scenes than just a direct routing offer.